The relative calm of the official exchange rate at least belies a week with deepening disarray at various other levels – political, institutional and socio-economic. Last Sunday’s Radical victory in the Mendoza provincial elections, and the Supreme Court ruling two days later, have the common denominator of boosting a gubernatorial clout which will condition the future government and opposition alike. The constitutionally impeccable Supreme Court ruling nevertheless exposes serious contradictions among all involved, including the justices themselves.
Finally, the six-month wage-price agreement against inflation proposed by Alberto Fernández might look more concrete than President Mauricio Macri’s promise to do better next time out but by the second half of the week, the Frente de Todos frontrunner’s idea was already running into trouble. This weekend’s Aerolíneas Argentinas/Austral pilot strike, in defiance of repeated Fernández appeals to lift it (as well as compulsory conciliation), severely strains his credibility. And Thursday’s partial reunification of the CTA and CGT union umbrellas exalting the candidate’s stellar presence can nevertheless only be completed by excluding from the labour leadership the trade unionists closest to Fernández.
The Mendoza result was welcome from at least two angles – the resounding victory of a Macri coalition ally (only the second this year) brings us slightly closer to a contested election while the crushing defeat of the ardently Kirchnerite opposition candidate distances Alberto Fernández further from being a puppet of his running-mate, former president Cristina Fernández de Kirchner. The Radical landslide (which doubled its previous provincial primary advantage) was as huge as the Frente de Todos margin in the PASO primaries, thus defying the national swing and making the general elections now only three weekends away more interesting, but the contrast with Macri’s PASO defeat in Mendoza is so strong that it raises questions about his coalition’s future leadership – questions which we will not explore here right now but they are worth watching.
The debate over the Supreme Court ruling is highly complex but should be extremely simple because Macri’s decrees cutting taxes should have been an absolute non-starter in constitutional terms as flouting the most basic principles of “No taxation without representation.” Indeed, the main criticism of the justices would be not confining their rejection of the decrees to these irrefutable grounds but enshrining a dubious precedent of the intangibility of the provincial cut within federal revenuesharing. Given that almost everybody agrees (and the International Monetary Fund insists) that Argentina’s tax burden is excessive, whither a major fiscal reform slashing taxes if the provinces (accounting for two-thirds of the publicsector payroll) cannot be touched?
The provincial governors are clearly the legal and political victors of this battle but neither side can claim the moral high ground (although both try). The Macri government tries to depict the 15 governors lodging this successful lawsuit (14 of them Peronist) as selfish misers hogging their coffers and denying the poorest of the land the benefits of a generous elimination of IVA valueadded tax on the most basic food items. But the cuts were inspired by anything but generosity – coming straight after the stunning PASO defeat, the income tax relief was blatant electioneering as limited to this month and last, while the IVA cuts are only for the rest of this year. The governors have legitimate grievances against these unilateral decrees dislocating their budgets without any consultation but the Peronist contradiction of first blasting Macri for not cutting food taxes and then bashing him when he does due to the lost provincial revenue makes them come across as inconsistent and insensitive (especially when the day before the ruling, poverty was confirmed as 35.4 percent for the pre-crisis first half of the year).
But whoever wins this election cannot escape dependence on the provincial governors – neither Macri’s minority government nor Alberto Fernández as the only real alternative to being a Kirchnerite puppet – a reality which this ruling only confirms.
There is less to be said about a labour panorama in a state of flux. The pilot strike was on at the time of writing but such stoppages are called off at the last minute often enough. CGT reunification has a long way to go and in any case viewing trade unions as representatives of the underprivileged becomes highly relative in light of the rise of the picket movement and in an Argentina where highly unionised skilled workers earn far better than many middle-class professionals and shopkeepers (not to mention freelance journalists, 94 percent of whom are below the poverty line, as one union revealed this week).
Perhaps a socio-economic agreement should begin by asking what society and what economy we have.
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